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Selling your rental property can be a strategic financial move, especially in today's real estate market where values remain relatively strong. However, if you're selling a property occupied by tenants, understanding their rights during the sale process is crucial.��

The laws regarding tenant rights when a landlord sells property can vary by location and whether a tenant has a lease. It’s essential to consider both local regulations and the terms of your lease agreement.��

Here are some key rights you should be aware of as a landlord or a tenant:

Right to receive notice to vacate the property

A tenant has the right to know when they need to completely vacate the property. Most of the time, this date is noted on the lease or rental agreement. Even if the property is sold to another owner, the lease term likely stands. In the case of a month-to-month agreement, the owner will still need to provide notice according to state laws.

Right to a relocation fee (location- and situation- dependent)

The landlord may also be required to pay a relocation fee to the tenant under certain circumstances. This can vary by location and may include situations where the tenant is displaced due to the sale.

Right to accept a lease termination payout

Owners can offer tenants a payout on the lease if they want them to vacate sooner than their lease stipulates, though the tenant is under no obligation to accept. If the lease doesn’t include an early termination clause, offering money to move out early might be the easiest way to get a tenant to leave the property sooner than they anticipated.

Right to occupy the property after it changes hands

The tenant’s agreement is tied to the property and not to the owner. That means if the property sells while occupied, the tenant has the right to live there until the standing lease expires. The new owner has to honor the length of the original lease created between the seller and tenant.

Right to 24 to 48 hours’ notice before showings

Coordinating showings can be difficult when you have a tenant occupying the property, but you’ll need to avoid violating their privacy during this step in selling the home. Beyond being polite and giving them a chance to tidy up the space, a heads-up to enter the property is legally required. Most states require that the tenant be provided with at least 24 to 48 hours’ notice. If not a 24-to-48-hour window, laws usually stipulate “reasonable notice,” which should be established between tenant and owner before scheduling showings.

Right to occupy the property during showings

Tenants are neither legally obligated to leave the property during showings nor required to keep the space clean to the seller’s standards before a showing. This can lead to tension between seller and tenant.

Right to leave the property in whatever state they please

Owners might want to offer tenants an incentive for their assistance during showings or property visits—otherwise, there’s no general requirement for tenants to tidy up for showings. Some landlords offer a specific percentage or dollar amount of an increased sale value.

Right to schedule appointments at reasonable hours

In addition to the advance notice, landlords need to be courteous of the appointment timing. There may be some flexibility around what’s deemed “reasonable.” Landlords should communicate with tenants to determine which times of day and which days of the week work best for both parties.

Right to the original lease terms

Unless the tenant agrees to renegotiate, they have the right to live on the property with the original terms they signed to. That means if the original lease allowed certain exceptions, the new owner will have to permit them as long as the lease is still in place.

Right to the security deposit

The tenant has a right to their security deposit when they move out, even if the property has changed hands. This means the seller must notify the tenant of the property’s new owner, as well as how they can collect the deposit when the time comes.

Right to a well-maintained property

Tenants have the right to inhabit a livable property, meaning the utilities need to be working, the property needs to be in good condition and repairs must be addressed, even when the sale takes place.

Right to a 30-day window to vacate after the property sells

If the original lease includes a lease termination due to sale clause, the landlord has the right to end the lease early if the property sells. However, the tenant typically has 30 days or more to vacate the property in the event of a sale.

Right to file suit in small claims court

If a tenant feels they’ve experienced retaliation from a landlord, they have the right to file a suit in small claims court. A tenant can sue for the return of their deposit, and a few states put no small claims court limit on the amount that a plaintiff can sue for in landlord-tenant security deposit claims.

Right to occupy after a foreclosure

If the property is a foreclosure, the tenant usually doesn’t have to leave immediately in the event of a sale. It varies by state, but if tenants have a long-term lease, they may be able to stay until it ends.

Right of first refusal to buy the property (situation- and location-dependent)

Depending on local laws, the tenant may have the first opportunity to buy the house. This law varies by city and might require landlords to follow a specific process.

FAQs

Here are more details and what to know about your rights as a tenant when your landlord sells the property.

Do tenants' rights vary based on the state?��

Yes, tenants' rights can vary significantly based on the state you're in. For instance, let's take a look at Connecticut and Arizona:

• Connecticut: In Connecticut, tenants have strong protections when a property is sold. They have the right to continue their lease even if the property changes ownership. The new owner must honor the terms of the existing lease until it expires. Moreover, tenants in Connecticut also have the right of first refusal, allowing them the opportunity to match a buyer's offer if the landlord decides to sell. This is an example of how state laws can greatly impact tenant rights.
• Arizona: In contrast, Arizona has fewer tenant protections in this context. While tenants still have the right to remain in the property until their lease expires, the new owner is not legally bound to honor the lease terms after the property is sold. This can make the situation more uncertain for tenants in Arizona compared to states with stronger tenant rights.

What are some considerations for landlords when selling their house?

When selling a property that's occupied by tenants, there are several considerations to keep in mind:

• Communication: Open communication with your tenants is key. Inform them about your intention to sell and discuss how the process will affect them.
• Notice periods: Understand the notice periods required by law for showings, lease termination, and vacating the property after a sale.
• Tenant cooperation: A good relationship with your tenants can make the process smoother. Consider offering incentives for their cooperation during showings or relocation.
• Maintenance and repairs: Keep the property well-maintained and address repairs promptly to avoid conflicts with tenants.
• Lease terms: Understand the lease terms and whether they carry over to the new owner. This can impact the attractiveness of your property to potential buyers.

How much time does a tenant have to move out?

The amount of time a tenant has to move out after a property sale depends on various factors, including the lease agreement and local laws. In some cases, tenants with fixed-term leases might have the right to stay until the lease expires. For month-to-month leases, landlords are usually required to provide 30 days' notice before termination. However, it's important to check your local regulations, as they can vary widely. Some places may have longer notice periods or additional protections for tenants.

Tenants have rights, even after a property sale

Understanding these rights is crucial to ensuring a smooth transition when selling your rental property. Open communication, cooperation and a respectful approach can help both landlords and tenants navigate the sale process with minimal friction. Always consult legal services specific to your situation and location to ensure you're following all relevant laws and regulations.